I am new to using .config files, having worked on apps that use .INI files and the registry until very recently. I am seeing a behavior in VS2008 that I would not anticipate, and wonder if it is the expected one.

When I configure the Working Directory setting in the VS2008 IDE for my Foo.exe application, I would have guessed that Foo.exe.config would get loaded from that Working Directory. It does not; it gets loaded from the ..\bin\Debug directory, even if I have a Foo.exe.config file in that Working Directory. If I examine the Environment.CurrentDirectory while the configuration is being applied by setting a breakpoint, I see that it is ..\bin\Debug. When I examine the Environment.CurrentDirectory after my main UI's Loaded event, it is set to the Working Directory I applied in the IDE.

Is this correct? (Why?)